Central Government Notifies Scheme for Amalgamation of Vijaya Bank and Dena Bank with Bank of Baroda

The Central Government, through a Notification issued by the Ministry of Finance (Department of Financial Services), formally introduced the Amalgamation of Vijaya Bank and Dena Bank with Bank of Baroda Scheme, 2019. This Scheme, designated G.S.R. 2(E), was published in the Gazette of India on January 2, 2019, and came into force on April 1, 2019. It was formulated in exercise of powers conferred by section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, and section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980, following consultation with the Reserve Bank of India. The primary objective of the Scheme was to effectuate the merger of Vijaya Bank and Dena Bank, referred to as "Transferor Banks," into Bank of Baroda, designated as the "Transferee Bank."

Under the provisions of the Scheme, upon its commencement, the entire undertakings of Vijaya Bank and Dena Bank were transferred to and vested in Bank of Baroda. This comprehensive transfer encompassed all business operations, assets (both tangible and intangible), estates, rights, titles, interests, powers, claims, licenses, permits, approvals, incentives, loans, subsidies, and all property, movable and immovable, including goodwill, cash balances, investments, and intellectual property. Crucially, all borrowings, liabilities, and obligations of the Transferor Banks, whether secured or unsecured, also vested in the Transferee Bank. The Scheme stipulated that this vesting would occur without requiring any additional act, deed, consent, or instrument for transfer. Furthermore, all existing contracts, deeds, bonds, agreements, and legal proceedings involving the Transferor Banks were to continue in full force and effect, with Bank of Baroda stepping into their place. The legislation provided: “On the commencement of this Scheme, the undertakings of the Transferor Banks shall be transferred to and shall vest in the Transferee Bank.”

A significant aspect of the amalgamation addressed the employees of the merging banks. Every permanent and regular officer or employee of Vijaya Bank and Dena Bank, including those on probation, became an officer or employee of Bank of Baroda. Their terms and conditions of service were to be approved by the Board of the Transferee Bank, with a proviso ensuring that their pay and allowances would not be less favourable, overall, than what they would have received in their respective Transferor Banks immediately before the Scheme's commencement. Employees who opted not to join Bank of Baroda were deemed superannuated and entitled to all superannuation benefits from their original banks. The Scheme also mandated the dissolution of the Boards of Vijaya Bank and Dena Bank, the cancellation of their entire share capital, and the delisting of their shares from stock exchanges. Shareholders of the Transferor Banks were to receive shares in Bank of Baroda based on a Share Exchange Ratio, the details of which were to be specified in a Schedule and determined through a procedure outlined in an Annexure, involving independent valuers and merchant bankers. Provisions were included for addressing fractional share entitlements and a mechanism for shareholders to raise grievances regarding the Share Exchange Ratio, involving an expert committee. Upon amalgamation, the surviving entity, Bank of Baroda, retained its name.

Keywords: Bank Amalgamation, Vijaya Bank, Dena Bank, Bank of Baroda, Banking Companies Act, Financial Services, Public Sector Banks, Merger Scheme, Share Exchange Ratio, Employee Transfer

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